Court Enters Order Granting Settlement Motion, Staying Appointment of Trustee, and Dismissing Fraudulent Conveyance Action

Following an Evidentiary Hearing on April 23, 2014, the Court on or about April 25, 2014 entered an Order approving the Debtor’s Expedited Motion to Approve Settlement Agreement, which was previously filed on March 19, 2014.  The Court is satisfied based on the representations of all parties in interest that approval of the Settlement Agreement is in the best interests of the Bankruptcy Estate.  The Order also directed the Debtor to file a Statement of Settlement Milestones by May 1, 2014, which shall set forth chronologically the deadlines that the Debtor must meet to remain in compliance with the terms of the Settlement Agreement.   In the event of a default, a Chapter 11 Trustee may still be appointed without any limitation as to its normal power, authority, and duties under the Bankruptcy Code.

The Order also sets a deadline of October 30, 2014, for the Debtor to file a statement representing that an escrow has been established to fund payments to unsecured creditors.  It is expected that $100,000 will be available in each of the three (3) affiliated Bankruptcy Cases for such distributions.  

Finally, the Order directs the Debtor to file a Fourth Amended Plan, Disclosure Statement, and Plan Summary by June 8, 2014, which will generally incorporate the terms of settlement.  In addition, the Adversary Proceeding filed by the Committee against FirstMerit Bank, et al., was dismissed and authority to pursue said claim(s) vacated without prejudice, contingent on the Debtor fully performing the Settlement Agreement.